Tech leaders brawl over tax to aid homeless
For months, technology companies in San Francisco have fought a local ballot proposition that would impose taxes on corporations to fund initiatives to help the homeless.
But last week, that unified front crumbled when Marc Benioff, chief executive of Salesforce, the online software company that is the city’s largest private employer, broke from the pack.
“Homelessness is all of our responsibility,” he tweeted. The billionaire committed $2 million to passing the tax measure and criticized his fellow tech moguls as not caring.
Now San Francisco’s tech community is in an uproar over Proposition C, on the ballot Nov. 6. Venture capitalists and companies including the online payments startup Stripe are lobbying and donating money to defeat the tax.
Jack Dorsey, chief executive of Twitter and Square, who opposes the measure, has publicly bickered with Benioff. On Friday, Dorsey tweeted, “We need to have long-term solutions in place, not quick acts to make us feel good for one moment in time.”
The vitriol among tech executives over the proposition has become “awkward,” said Scott Wiener, a Democratic state senator who represents San Francisco and surrounding areas and who opposes the tax. Still, he praised the companies for becoming more involved in local politics.
The dispute over Proposition C raises the question of what responsibilities tech companies have for problems in their own backyards. Tech firms often receive blame for exacerbating inequality and driving up property values with their hefty employee pay packages, contributing to homelessness. The question of what these companies may owe their hometowns is magnified because many have taken advantage of local tax breaks to spur their own growth.
In San Francisco, some tech companies, including Dorsey’s Twitter, used tax breaks in 2011, which the city offered to keep them from moving away. In 2012, San Francisco also adjusted its tax code by switching from a payroll tax to a gross receipts tax, a change that favored the tech industry, which spends extravagantly to recruit top engineers.
Many of the tech companies that are against Proposition C declined to comment on the record. Opposing a measure that is aimed at reducing homelessness is tricky for the firms, especially in a city that has the seventh-largest homeless population in the nation.
But in public comments, Dorsey and others have argued that San Francisco officials are best equipped to deal with homelessness, not them. They have said the city has a new mayor, London Breed, who was elected in June partly on her promise to combat the issue, and she needed time to deliver on her campaign.
“I’m down to help in any way I can, as long as the mayor has the accountability,” Dorsey said. He added he was not worried about being perceived as opposing support for the homeless “because it feels like the right thing to do to get into the nuance and bring out more of the concerns.”
Those in favor of the new tax argued that they are not asking tech companies to come up with a strategy to save the homeless. Instead, they said, they simply want to raise taxes on the firms to fund resources. The extra money from the proposition could total $300 million a year and would effectively double the city’s budget for addressing homelessness.
“You’re either for the homeless or you’re not,” Benioff said. “Everyone is willing to say it’s a terrible problem and it’s getting worse, but only so many are willing to write a check to make it better.”
Proposition C was put together by the Coalition on Homelessness, a local nonprofit group. The measure is designed to fund shortterm shelters, permanent housing and mental health services for the homeless with a gross receipts tax and a payroll tax on companies above a certain size. The city estimated that nearly half the businesses that would be affected by the tax are in tech and finance.
Sam Lew, policy director of the Coalition on Homelessness, said the proposition was a “no-brainer” because the funding would provide housing.
Polling conducted by the opposition campaign in early September indicated that 56 percent of likely voters favored the tax, but that number decreased to 47 percent when they received opposition messaging.
Some tech companies began giving money to the campaign to fight the tax. In September, Stripe donated $20,000 to the “No on C” effort. In an editorial in the San Francisco Chronicle that month, its general counsel, Jon Zieger, wrote, “Prop. C will likely hurt more than it helps” because there was no comprehensive plan to tackle homelessness and the extra money might go nowhere.
Early this month, Breed declared she opposed the proposition, saying it was fiscally irresponsible. “I do not believe doubling what we spend on homelessness without new accountability, when we don’t even spend what we have now efficiently, is good government,” she said in a statement.
On Oct. 8, Benioff announced his $2 million commitment to passing the measure.
Dorsey now plans to give $75,000 to the campaign against the tax, said a Square spokesman
Cisco’s chief executive, Chuck Robbins, spoke in support of Benioff this week, saying, “We must end the homelessness and housing crises our communities are facing.”